Exhibit 15-4 Balance sheet of Tucker National Bank
Assets
Liabilities
Required reserves$ 4,000
Checkable deposits$20,000
Excess reserves16,000
Loans 0
Total$20,000
Total$20,000
Assume all banks in the system started with the balance sheet shown in Exhibit 15-4 and the Fed makes a $1,000 open market purchase. The result would be a(n):
A. infinite contraction of the money supply.
B. infinite expansion of the money supply.
C. $1,000 expansion of the money supply.
D. $5,000 expansion of the money supply.
Answer: D
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The average propensity to consume (APC) equals
A) the change in consumption expenditures divided by the change in real disposable income. B) real disposable income divided by consumption expenditures. C) the change in real disposable income divided by the change in consumption expenditures. D) consumption expenditures divided by real disposable income.
C = $750 + 0.75(1 - 0.4)y i = $600 g = $500 nx = -$50
Use the above data to: a. Calculate the equilibrium level of GDP b. Calculate the value of the expenditure multiplier c. Find the change in the initial equilibrium GDP if autonomous investment increases by $75. d. Find the change in the initial equilibrium GDP if autonomous government purchases decreases by $50. e. Find the change in the initial equilibrium GDP if autonomous net exports increase by $10.
Suppose a roll of paper towels costs $4 at Sam's Quick Stop, a local quick stop, and the same roll of paper towels costs $1 at Big Supplies, a large, retailer located in a more remote location. If a customer's total cost of travel to Sam's Quick Stop is $2 and is $5 to Big Supplies, which of the following is true?
A) It is cheaper for the consumer to buy the paper towels at Sam's Quick Stop. B) It is more expensive for the consumer to buy the paper towels at Big Supplies. C) It is cheaper for the consumer to buy the paper towels at Big Supplies. D) The consumer is indifferent as to where they buy the paper towels.
Which of the following is NOT an example of raising rivals' fixed costs?
A. Federal Express lobbying the U.S. Department of Transportation to increase annual terminal fees. B. Existing doctors in a particular medical field lobby to require new doctors to acquire new licenses. C. Yellow Cab Company lobbying New York City government officials for an ordinance that would require all taxi cab drivers to pay for a medallion, giving them the right to drive a cab in New York City. D. The New York Port Authority lobbying to increase the tolls on New York City's George Washington Bridge.